BAE Systems said delays in completing a substantial deal with Saudi Arabia and lower spending by European and American military customers dented profit, in a sector facing further government defence cuts.

Europe’s largest defence contractor, which will build Britain’s next generation of nuclear-armed submarines, on Thursday said earnings before interest, taxes and amortisation (EBITA) fell 3 percent in the first six months of the year.

U.S. rivals, such as Northrop Grumman and General Dynamics, also reported lower earnings last month, and flagged uncertainty about an additional $500 billion in U.S. defence spending cuts that could come in January, on top of $487 billion in cuts already made.